lWASHINGTON, Sept. 14, 2016 – Bayer’s plan to take over Monsanto is triggering some alarm bells within some of the nation’s largest farm organizations, and lawmakers are taking note, too.

The $66 billion deal (including debt) that was announced by Bayer and Monsanto Wednesday morning could potentially create the world’s largest crop protection and seed company – if regulators approve.

But first, the deal and its potential impact will undergo intense scrutiny by regulatory agencies around the globe. Monsanto CEO Hugh Grant said the companies will need to file in about 30 jurisdictions for the merger, including in the U.S., European Union, Canada and Brazil. The companies also plan to seek approval from the Committee on Foreign Investment in the U.S., which reviews foreign-driven purchases of U.S. assets for national security risks.

Bayer and Monsanto officials acknowledged there may be some overlap in their respective portfolios and some divestitures may be required by regulators. But they declined to speculate in advance on which products may have to be sold off in an effort to complete the deal.

In the meantime, U.S. farm organizations are encouraging regulators to take a close look “under the hood,” especially as other major industry players like Dow and DuPont and ChemChina and Syngenta are also planning to join forces.

"This deal between Monsanto and Bayer comes close on the heels of the proposed Dow-DuPont merger,” said Bob Young, chief economist with the American Farm Bureau Federation. “Farm Bureau believes the Department of Justice should undertake a close review of the overall business climate that has encouraged these combinations, rather than evaluating them in isolation. Consumers must continue to have fair access to the best technologies and innovation.”

"Farmers and ranchers, in particular, are interested in how these deals will impact research and development budgets for companies like Bayer and Monsanto. We depend on access to enhanced technology, and would hate to see agricultural innovation suffer at the cost of business decisions," Young said.

American Soybean Association President Richard Wilkins and National Corn Growers Association President Chip Bowling also expressed concerns, primarily with respect to how the deal could affect input costs, but also innovation, research and competition in the marketplace.

Bayer and Monsanto officials, meanwhile, told reporters that the acquisition will strengthen research and development and provide more tools for farmers, not fewer.

“The way we’ve always looked at it is that Monsanto has the best seeds and traits portfolio in the industry…. and we’ve always felt that we have the most innovative crop protection portfolio,” explained Liam Condon, head of Bayer’s Crop Science Division. “We’ve both been making significant efforts in building a digital platform with Monsanto being significantly more advanced than anybody else in the industry.”

“Both of our companies have a shared vision that if we work across these technologies we can bring innovation to a whole new level. That’s exceptionally compelling and where we see the beauty of this,” Condon added.

Bayer noted that the combined company will have an R&D budget of about $2.5 billion, investing almost $1 billion more than the nearest competitor, which would be a combination of Dow Ag and DuPont Ag. (See Bayer's slides at left.)

“There’s a huge need to invest more in this space,” said Robert Fraley, Monsanto’s executive vice president and chief technology officer. “More investment in R&D drives more innovation and more products for growers that ultimately enables them to compete more successfully and more profitably. The real winner in this transaction is going to be the grower who is going to see more innovation.”

Still, the National Farmers Union was extremely critical of a Bayer-Monsanto merger and industry consolidation in general.

“Consolidation of this magnitude cannot be the standard for agriculture, nor should we allow it to determine the landscape for our future,” NFU President Roger Johnson said in a statement.

“For the last several days our family-farm and ranch members have been on Capitol Hill asking members of Congress to conduct hearings to review the staggering amount of pending merger deals in agriculture today. We will continue to express concern that these megadeals are being made to benefit the corporate boardrooms at the expense of family farmers, ranchers, consumers and rural economies,” Johnson added.

Senate Judiciary Committee Chairman Chuck Grassley has called a hearing of the panel for Sept. 20 to look at the consolidation trend in the seed and chemical industries. Johnson, Young and the CEOs of major crop chemical companies are on the witness list, among others.(For the entire list of witnesses, click here.)

“Iowa farmers who I've spoken with are worried about rising input costs, especially in an increasingly weak agriculture economy,” the Iowa Republican said in a statement. “Today’s announcement will only heighten those concerns.”

“As mergers continue to occur in the seed, agrochemical and fertilizer industries, federal antitrust regulators must be ever more vigilant to ensure a robust competitive environment in this important sector. And, with several proposals under review, it’s crucial that the antitrust authorities collaborate as appropriate with each other and the Department of Agriculture in their analysis to ensure that competition is preserved for farmers and consumers.”

Montana Senator Jon Tester went further, calling on the Justice Department to reject the merger between Bayer and Monsanto because it will “reduce competition, suppress innovation and threaten the very fabric of rural life.”

This week’s guest on Open Mic is Ken Dallmier, President and COO of Clarkson Grain Company. While the global grain business is dominated by supply, demand and now trade wars, this Illinois-based company functions under a customer-focused mindset. Dallmier says this generation of consumer demand is dominated by a different set of social values leading to questions over the way food is produced and the prices they’re willing to pay. Sustainability, organic and non-GMO are providing farmers an income stream isolated from traditional market forces.

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The world of agriculture extends beyond what’s growing in your field or living in your barn, and here at Agri-Pulse, we understand that. We make it our duty to inform you of the most up-to-date agricultural and rural policy decisions being made in Washington D.C. and examine how they will affect you – the farmer, the lobbyist, the government employee, the educator, the consultant and the concerned citizen.